Regulators refuse to block Babcock & Brown Communities deal

While declining to make a declaration of unacceptable circumstances over Lend Lease’s proportional takeover offer for the listed retirement village fund, the Australian Takeovers Panel requested the two parties not execute the first part of their agreement before the shareholder vote on 17 November.

The Australian Takeovers Panel has declined to block an A$236.8 million (€124.4 million; $158.4 million) deal between Babcock & Brown Communities and property developer Lend Lease Corporation.

Prime Retirement Trust, which had earlier launched a rival takeover offer for the listed retirement village investment fund, asked for a declaration of unacceptable circumstances on 10 October in an effort to block the Lend Lease deal.

The takeover panel also requested that Lend Lease and Babcock & Brown Communities delay the execution of the initial part of their agreement until Babcock & Brown Communities shareholders vote on the Lend Lease plan on 17 November.

Prime had argued that not requiring shareholder approvals for all the terms of the plan constituted a “frustrating action” with regard to its competing bid, which it made on 4 September, and asked that the proposals be submitted for shareholder approval.

“The decision vindicates that Prime Trust's concerns over the proposed actions of these parties were apporopriate to put to the Panel,” Prime said in a statement.

Stage 1 of the proposal called for Babcock & Brown Communities’ manager, Babcock & Brown Limited, to sell management rights and its 12.5 percent stake in the fund to Lend Lease in a transaction valued at A$66.8 million (€37.4 million; $53.4 million). Of that, A$17.5 million would cover the contract, and the remainder would cover its equity stake, payable in two tranches.

Babcock & Brown Communities’ board, which had earlier rejected Prime’s offer to acquire 40 percent of the fund and opted instead to accept the competing offer from Lend Lease, continued to urge shareholders to reject Prime's offer in response to the Panel's ruling.

The offers were part of a price discovery process for the fund that followed a strategic review by Babcock & Brown Limited of the ownership and management of its satellite funds.